The new offerings on the Housejoy platform range in price from ₹1-1.5 lakh for renovation to ₹50 lakh to ₹1 crore for construction services.Supraja Srinivasan | ETtech | August 07, 2018, 09:54 IST

Housejoy, the Amazon-backed on-demand home services provider, has realigned its focus towards categories with big-ticket sizes that offer higher margins in a bid to boost revenue and attain profitability.

The company has built up home services such as renovation, interior design and construction over the past month. The new offerings on its platform range in price from ₹1-1.5 lakh for renovation to ₹50 lakh to ₹1 crore for construction services.

"The margins on these high-ticket categories is about 20%, so conversions are strong. While home renovation services were offered on a small scale earlier, we have now formally introduced this over the last month with our focus geared towards growing this over the long term," said Saran Chatterjee, CEO of Housejoy.

He said Housejoy received 25 to 50 big-ticket projects across home services in the past couple of months, prompting the company to consider scaling up this high-margin category and hire additional senior management personnel.

Housejoy’s decision to offer home construction services follows its strategy to focus on categories that aid top line growth with a larger margin through higher ticket offerings such as movers and packers, home cleaning, pest control, painting and fullstack services such as beauty. This comes as the company cuts dependency on low-revenue categories such as plumbing, carpentry and electrical appliances.

ET reported in May that Housejoy had let go over 40 employees across departments to check spiralling costs during a period of slow revenue growth. Chatterjee disputed the use of the term 'layoff' and said the move was a reflection of the company’s strategic business transition.

“We were realigning employees towards our new strategy (of higher revenue through large-ticket categories.) The exit of employees is a realignment with regard to that strategy,” Chatterjee said.

Housejoy claims the shift towards highticket categories is paying off, with cash burn having reduced by 60% in FY18 and revenue more than doubling. Operational expenses in FY17 were at almost ₹8 crore per month, while monthly revenue was about ₹2 crore, according to Housejoy financial documents filed with the Registrar of Companies.

While Chatterjee declined to share financial details for FY18, he maintained that revenue growth would accelerate significantly in FY19 on the back of the new services and net cash burn is expected to reduce by about 50-55%.

"With the focus towards fullstack businesses and high-ticket sized categories, conversion towards profitability in about 12-18 months is feasible for Housejoy," said K Ganesh, promoter of Growth Story, an investor in Housejoy.

The company is said to be in talks with existing investors to raise funds, although the timeline for the closure of the round or the amount is unclear. Chatterjee and Ganesh declined to comment on the fund raising.